The market the day before
Trading on June 29, the main benchmarks of the US stock market ended in different directions. The S&P 500 dropped 0.07%, closing at 3,819 points, the Nasdaq lost 0.03%, the Dow Jones added 0.27%. Issuers from the healthcare sectors (+0.87%) and discretionary consumer goods (+0.49%) showed positive dynamics. Energy companies (-3.43%) and representatives of the real estate industry (-0.76%) looked worse than the market.
Company news
- Tesla Inc. (TSLA: -1.79%) is closing one of its offices in California and laying off 200 employees as part of a cost-cutting strategy, the Wall Street Journal reports.
- FedEx Corp. (FDX: -2.62%) presented a revised forecast ahead of the investor meeting. The new targets for fiscal year 2025 imply an increase in total annual revenue and adjusted EPS by 4-6% and 14-19%, respectively.
- Bed Bath & Beyond Inc. (BBBY: -23.58%) reported an adjusted quarterly loss of more than the consensus forecast and did not meet revenue expectations. Amid the weak results of the first quarter, the company announced the resignation of its CEO, which could be a positive signal for investors.
We expect
On June 29, Fed Chairman Jerome Powell spoke at the ECB forum, acknowledging during the discussion that efforts to combat high inflation and the tightening of the PREP are accompanied by risks of a serious slowdown in economic activity and, although a "soft landing" of the economy is still possible, this process will be difficult, and its result is not guaranteed by the regulator. In an interview with CNBC, Cleveland Fed President Loretta Mester said that she considers it necessary to further increase the discount rate by 75 bps in July and expects to reach 3-3.5% by the end of the year. Today's release of the price index of personal consumption expenditures (PCE), reflecting the dynamics of inflation, will be a key moment for market participants, as it will allow them to predict the next steps of the Federal Reserve.
According to the final estimate, in the first quarter, US GDP decreased by 1.6% QoQ, whereas previously a possible drop was estimated at 1.5%. At the moment, the consensus forecast of economists assumes the growth of the US economy in the current quarter by 2.5% QoQ, while the Atlanta Fed expects zero dynamics of the country's GDP. At the same time, according to preliminary estimates, the US trade deficit is shrinking, and the volume of inventories in the country increased by 2% in May, which acts as a factor in supporting economic growth. In addition, the presence of excess stocks at the largest retailers pushes them to the decision to lower prices to free up filled warehouses and attract buyers. It is expected that this will also contribute to a slowdown in commodity inflation. In turn, price stabilization will serve as a signal for the Fed to raise interest rates less aggressively.
- The stock exchanges of the Asia-Pacific region completed the trading session on June 30 in different directions. Japan's Nikkei dropped by 1.54%, Hong Kong's Hang Seng lost 0.62%, China's CSI 300 rose by 1.44%. EuroStoxx 50 has been adjusted by 1.94% since the opening of trading.
- Brent crude futures are trading at $116 per barrel. The price of gold is $1813 per troy ounce.
In our opinion, the S&P 500 will hold the upcoming session in the range of 3770-3840 points.
Macrostatistics
The PCE index for May will be published today. The overall indicator is expected to increase to 6.5% YoY after 6.3% at the end of April. The growth of the underlying PCE (excluding volatile components), on the contrary, may slow down to 4.8% YoY after 4.9% a month earlier.
Sentiment Index
The sentiment index dropped by one point to 28.
Technical picture
The S&P 500 ended the last trading session in the red. The RSI is held near neutral values. MACD indicates the bulls' attempts to hold positions, but the probability of a trend reversal in favor of buyers in the near future is still weak. The next resistance level is located around the psychologically significant mark of 3990-4000 points, the closest support is still the range of 3600-3660 points.